Taking salary as capital gains only

[malvolio]

It's evasion. The position quoted here is where a second legal entity takes over the old company's assets and business. In the OP's case, the same person owns both old and new companies, and there is no reason for the first company to have ceased trading, other than to avoid paying tax.

[Rebecca Loos]

other than to avoid paying tax
In your own words!!! So it is avoidance, and not evasion, otherwise you'd have said "other than to evade paying tax"

Rebecca in "pedantic yes, but so is the law!" mode

[malvolio]

No it isn't, nah-nah-ni-nah-nah...

[ASB]

Malvolio,

In order for it to be evasion there has to be some breach of the law.

What is actually illegal in:-

- Incorporating company.
- Winding it up.
- Distributing the funds (either as income subject to income tax or as captital - siubject to potential CGT).

- Repeating the process.

Answer. Nothing. [Although if you can actually demonstrate some illegality I will happily concede it is evasion]

Now, I would entirely agree that this is a very risky strategy. And if you made any tax saving (i.e. avoidance) it could only be by getting the concession - which is unlikely.

Further, if you did actually get the concession the IR could very well invoke Ramsey to effectively disallow the transactions (and this would then lead to penalties and interest).

[boredsenseless]

And I'm willing to guess they may start proceedings to get you barred from holding the office of Director for the incorrect payment of PAYE/NIC etc...

[tim123]

And I'm willing to guess they may start proceedings to get you barred from holding the office of Director for the incorrect payment of PAYE/NIC etc...

Don't put any money on it.

The courts are not going to bar someone from holding a directorship for things as trivial as filling in IR forms wrong. There are other sanctions (fines) for this. It doesn't come anywhere near the requirements of illegal trading to be barred.

tim

[The Late, Great JC]

Don't put any money on it.

The courts are not going to bar someone from holding a directorship for things as trivial as filling in IR forms wrong. There are other sanctions (fines) for this. It doesn't come anywhere near the requirements of illegal trading to be barred.

tim

You'd have to do something seriously Threaded to get barred from holding a directorship!

[ASB]

But since you haven't:-

a) Incorrectly paid the PAYE or NI
b) Broken any laws

Then it's a little tricky to see any sanction.

[IR35 Avoider]

Am I understanding correctly?

You turn over 100K and pay tax and NI so that 95K has either gone in tax or been paid as actual net salary or set aside in the company but earmarked as already taxed. (I.R. will let you take it out later as a dividend with no more tax due, I think.)

How does making a capital gain help? You only have 5K (less expenses) left which hasn't been taxed, the most you can avoid on that is 1.6K. Not much to shout about. I'm sure this isn't the plan - the plan involved somehow not paying the tax on the "salary" left in the company. I don't understand what's being proposed.